Downstream: why new car sales have fallen in Russia
After a long period of growth, sales of new cars have sharply declined in the last month of autumn. This was caused by the increase in the utilization fee and the key rate of the Central Bank, which caused an increase in car prices and the rise in the cost of car loans, experts say. The downward trend in new car sales will continue, market participants warn. Details - in the material of "Izvestia".
Up and down
At the end of 11 months in Russia was sold almost 1.45 million new cars, which is 54.1% more than in the same period last year. This is reported by the analytical agency "Avtostat", based on the number of issued FTEs. At the same time, in the last month of the fall, the car market showed a serious decline. If in October 171.2 thousand new passenger cars were sold, in November buyers bought only 121.9 thousand cars. Thus, the number of sold cars decreased by 28.8% during the month. This is the lowest figure since the beginning of spring, noted in "Avtostat".
The Lada brand traditionally holds the leadership: 37,854 cars produced by AvtoVAZ were sold in November. The title of the most popular foreign brand was retained by Haval with 15,427 cars sold. The third place is occupied by Chery, which sold 11,063 cars in November. Geely cars sold 10,151 units, while Changan models were purchased by 6,261 buyers. Belarusian Belgee with the result of 3166 cars is on the sixth line, followed by Omoda (2860 cars) and the capital's Moskvich, which for the first time this year got into the top 10 with the indicator of 2620 cars. Jetour and Jaecoo close the November top ten with 2598 and 2144 cars sold respectively.
Among the models, the best result was shown by "Granta": in the last month of the fall it was purchased by 15,995 buyers. Nevertheless, compared to November last year, its sales decreased by 1.3%. Its "big sister" Lada Vesta sold 8884 units (+35.7%). The most popular model of the foreign automaker was Haval Jolion crossover produced in the Tula region - 5603 sold cars (-22.5% compared to last November). The sales of Lada Largus, the production of which resumed in the middle of May, are gaining momentum. This model was purchased by 4992 buyers in November. The fifth and sixth lines in the personal ranking are occupied by two Chery crossovers - Tiggo 4 Pro (4,675 units, +28.7%) and Tiggo 7 Pro Max (4,243 cars, +13.1%). Next are Nivas: classic Legend (4020 units, -15.2%) and more modern Travel (3962 cars, -20.9%). Haval M6 with the result of 3041 cars (34.5%) and Geely Mojaro, which sold out 3036 units (-4.1%), close the top ten.
Predicted surprise
The decline in sales was expected and predictable, but the scale of the fall came as a surprise to many, said Maxim Kadakov, editor-in-chief of Za Rulem magazine.
- According to my feelings, the decrease in the number of sold cars in November should have been at the level of 15-20% compared to October. The market drop of almost 30% was an unpleasant surprise," Kadakov told Izvestia.
He calls the main reason for the decline in sales last month the effect of the increased rates of the utilization fee, which caused an increase in car prices, as well as another increase in the key rate by the Central Bank, which made car loans unaffordable for many potential buyers.
Cars that could have been bought in November were purchased earlier, said Igor Morzharetto, a partner at the Avtostat analytical agency.
- We saw record sales in August, September and October, when buyers, acting on the principle of "we must take the car now - tomorrow it will be more expensive", rushed to car dealerships. And to some extent this behavior was justified: cars started to become more expensive, and in addition to the increase in the scrappage fee, the falling ruble exchange rate also affected their price," he shared his observations.
After three "fat" months on the Russian car market there is a noticeable decline in November, states Irina Frank, Managing Director of Frank Auto.
- Many people tried to buy a car before the increase in the rates of duty on October 1 - this is the reason for the high sales in mid-autumn. By November, the ardor of buyers cooled down," she told Izvestia.
In addition, the role was played by the rise in the price of car loans, which for many citizens have become unaffordable with a rate of up to 30%. Also, about 20% more refusals to obtain loans for a car, which affected the decline in sales, said Irina Frank.
Key problem
In November, sales were very difficult, Andrey Olkhovsky, General Director of Avtodom Group of Companies, told Izvestia. According to him, price and model competition, as well as pressure from banks in terms of regulatory requirements of the Bank of Russia had a direct impact on this. The Central Bank of Russia's key rate of 21% is "tipping point" for buying a car, he emphasized.
- The first week of November was the most shocking: minus 60% to the first week of October. The second week was slightly better: minus 34% to the second week of October. And the third week was -24% to the third week of October. The fourth week of November was comparable to the third week. The key factor is the limitation in auto loan approvals for buyers," he shared his observations.
The high key rate is the main reason for the decline in sales in November, agrees General Director of AutoSpecCenter Group of Companies Andrei Terlyukevich. According to him, the tightening of monetary policy made leasing products for legal entities unprofitable, which led to a reduction in corporate sales. In addition, high rates on car loans have sharply limited the range of buyers among individuals, he added.
The general cooling of demand in the market due to rising prices and rates on loans and leasing payments is the main reason for the decline in sales, believes Renat Tyukteev, Deputy General Director for New Car Sales at Avilon AG.
The forecast is unfavorable
The experts interviewed by "Izvestia" give an unfavorable forecast regarding the future prospects of the new car market development. They all agree that sales will continue to decline.
- Dealers now have a rather large stock of cars, which must be sold off. Most likely, in December we will see traditional pre-New Year discounts and promotions, which will revitalize the market somewhat. However, it is unlikely that we will be able to avoid a fall in the future: the next stage of the increase in the utilization fee and, as a consequence, a new round of prices for cars will have an impact," believes Igor Morzharetto, a partner of the analytical agency Avtostat.
The current weakening of the ruble has so far had little effect on demand and the cost of cars in warehouses, but will definitely lead to higher prices for new imported cars, believes Andrei Terlyukevich. According to him, a slight stabilization of the market is possible in December, as the New Year holidays traditionally stimulate buying activity. However, in the first quarter of 2025, the decline in sales will continue, he believes.
- The market will now reduce its inventories by all means, as financing of warehouses at the current key rate for 1.5-2 months leads to direct losses. I think that we see a long-term trend of sales decline," shared his forecast with Izvestia, the general director of AvtoSpecCenter Group of Companies.
However, Renat Tyukteev, Deputy General Director for New Car Sales at Avilon AG, is optimistic about the near future.
- We predict that December will be livelier than November. Both individuals and corporate segment will become active. Perhaps, the car market will close the last month of 2024 with the result of 150-160 thousand cars. pieces," he believes.
